Oh no, I had no idea about quarterly payments! So I should have been paying throughout 2024 already? How do I even calculate how much to pay each quarter when my income varies so much month to month?

Yes, you should have been making quarterly payments for 2024, but don't panic too much - first-time business owners often miss this. The payments are due in April, June, September, and January of the following year. For calculating the amount, you have a few options. The safest way is to pay 100% of your previous year's tax liability divided by four (or 110% if your income was over $150,000). Since this is your first year, you can estimate based on your projected annual profit. The IRS Form 1040-ES has worksheets to help you calculate this. If your income varies a lot, you can also use the "annualized income installment method" which lets you pay based on what you actually earned each quarter.

The QBI is huge! But doesn't it phase out at certain income levels? I think there are also limitations based on business type.

You're right about the phase-outs, but they start pretty high - around $170,700 for single filers or $341,400 for married filing jointly (for 2024). Since OP mentioned making about $24,000, they should be well under the threshold. There are limitations for certain service businesses like law, medicine, consulting, etc., but a woodworking business making physical products would generally qualify without those restrictions. The basic calculation is straightforward for most small businesses under the income thresholds - typically 20% of your net Schedule C income.

Thanks for the reminder! I almost sent it to the address from last year's instructions without checking. Do you know if the processing time is affected by using priority vs certified mail?

Processing time isn't affected by the shipping method you choose. Once your return reaches the IRS facility, it enters the same processing queue regardless of how it arrived. The only timing advantage with Priority Mail is that it typically arrives at the IRS 1-3 days faster than regular Certified Mail. What DOES affect processing time is the complexity and format of your return. Paper returns generally take 6-8 weeks minimum to process, compared to 2-3 weeks for electronic filing. Within paper returns, those with many schedules, attachments, or amendments tend to take longer as they often require manual review.

E-filing doesn't work for everything. I tried to e-file an amended return last year and the software wouldn't allow it because of some specific schedules I had to include. Some prior year returns also can't be e-filed after a certain date.

Thanks for this advice! I just pulled out my Form 4549 and compared it to the CP22. You're right that there are penalties listed on the CP22 that weren't on the examination report, but they only account for about $1,200 of the difference. There's still $1,550 unaccounted for, which seems to be an additional tax assessment that wasn't in our agreement.

That's concerning. When you and the auditor reached an agreement, you should have signed a form acknowledging the additional tax assessment. Check if you have a copy of this agreement - it's your strongest evidence. With that $1,550 unexplained difference, you should definitely contact the IRS promptly. When you call, ask specifically for the "examination department" and reference your audit case number. They should be able to pull the records and see what was actually agreed upon. Be prepared to fax or mail copies of your documentation showing the original agreed amount.

This is excellent advice. The IRS often combines multiple issues in a single notice, especially if they're doing a multi-year review. I've seen CP22s that reference adjustments from completely different issues all bundled together.

Do you know if educational software counts? I purchased some math game subscriptions for my students but I'm not sure if that qualifies under the teacher expense deduction.

Educational software definitely counts toward the teacher expense deduction! The IRS specifically includes "books, supplies, equipment (including computer equipment, software, and services), and other materials used in the classroom" in their definition of qualified expenses. Those math game subscriptions should qualify as long as you paid for them yourself and weren't reimbursed by your school. Just make sure to keep the receipts or subscription confirmation emails as documentation.

In fileyourtaxes.com, after you complete the federal section, it should automatically take you to state taxes. Look for a section called "Credits" or "Deductions" in the state portion. For Illinois specifically, I believe you're looking for the "K-12 Education Expense Credit" which should be listed in the credits section. If you can't find it, try using their search feature and type "Illinois education credit" or something similar. The state sections are sometimes less intuitive than the federal ones.

7 So what form do I need to fill out for this? Is it complicated?

22 You'll need to fill out Schedule D (Capital Gains and Losses) and Form 8949 (Sales and Other Dispositions of Capital Assets). The 1099-B from Cash App contains all the information you need to complete these forms. It's not particularly complicated for simple transactions like yours. Most tax software, even free versions, will walk you through entering the information from your 1099-B and will automatically fill out these forms for you. The software will ask for details like purchase date, sale date, cost basis, and proceeds - all of which should be on your 1099-B.

24 This is the right answer. I had a similar situation last year. Reported tiny gains, took maybe 5 extra minutes in TurboTax free edition, paid no extra fees, and had zero issues. All this worrying is more work than just filing it correctly.

4 Exactly! People get so worried about tax stuff when the solution is often simple. In this case: report it properly, pay the fraction of a penny you might owe, and sleep well knowing you're compliant. If the IRS sent you a form, they know about it - just include it in your return.